S. 271(1)(c): Non-offering of stamp duty/DVO value as consideration for capital gains does not attract penalty if facts are on record

The assessee was the owner of office premises which were sold in AY 2004-05 for Rs. 2 crore. The AO noted that the stamp duty valuation of the property was Rs.3,72,42,000 and that the DVO had valued the property at Rs. 2,70,03,920. The value adopted by the DVO was taken as the consideration for sale of the property u/s 50C and capital gains was assessed on that basis. The assessee accepted the same. The AO levied penalty u/s 271(1)(c) for furnishing inaccurate particulars of income. This was upheld by the CIT(A) though deleted by the Tribunal. Before the High Court, the department relied on Chuharmal vs. CIT 172 ITR 250 (SC) and argued that even though s. 50C created a liability for deemed income, still penalty u/s 271(1)(c) could be levied. HELD by the High Court dismissing the appeal:

The Tribunal finding that the case was not one of furnishing inaccurate particulars of income or of concealment inasmuch as there was a registered sale deed and the consideration was mentioned therein cannot be faulted. Also, the DVO determined the value at a figure from that of the stamp value. The larger question posed for consideration as to whether s. 271(1)(c) penalty can apply to deemed income is left open for consideration in an appropriate case.